Editorial: Pension lawsuit by Marin unions a sign of what's ahead

THE LAWSUIT filed by county employee unions over pension changes illustrates how hard it will be to reform a complex system that must be changed.

The Marin County Employees' Retirement Association board voted 7-2 to limit the kinds of compensation used to determine pensions for current employees. The board is implementing a new state law.

This lawsuit is not about big money. The benefit payments at issue cost the county less than $175,000 last year. The lawsuit was filed by five unions representing nearly 2,000 government workers at the Marin Civic Center and in San Rafael.

The unions are reluctant to give any ground on what they view as vested rights — benefit promises made to employees when they were hired — and enhancements made since then.

They are drawing a legal line in the sand.

We appreciate union leaders' desire to protect their members' pensions, but we also hope that common sense and the big picture is part of their decision-making process.

Public pensions are grossly underfunded and not sustainable. The costs of paying for them are resulting in jobs being lost and vital government services eliminated. The issue has many taxpayers up in arms, especially since many of them do not have pensions of any kind, much less ones that are based on such payments that this lawsuit is over.

"Final pay" is a key element in determining pensions. "In kind" payments to employees should not be included in the final pay amount, according to the new state law. That includes such unused benefits as health insurance and payments for "additional services rendered outside of normal working hours, whether paid in a lump sum or otherwise."

Over the years, unions have negotiated fringe compensation called "additional services" that include standby pay, administrative response pay and any form of callback pay.

This legal fight also illustrates another financial problem that has come home to roost for local governments. Our elected public officials over the past few decades have been quick to approve union contracts that include arcane enhancements that taxpayers are now on the hook for — forever, according to the unions that negotiated for them.

Elected leaders and top officials signed off on those benefit improvements because it was the painless thing to do at the time. Perhaps they didn't understand the financial ramifications of their decisions.

The result is an unsustainable public pension system that must be reformed. Marin County officials have taken important steps to reduce the unfunded public pension liability, but much remains to be done.

Local public employee unions say they also want a sustainable system, that their members have much at stake. This lawsuit indicates these unions appear willing to go to court to contest even relatively minor reforms.

The new state pension laws were a modest but important step in the right direction. The Marin County retirement board did the right thing in voting to implement this change.